Formal review of Christchurch City Council Insurance

From: Cr. Helen Broughton, Chair of
the Corporate and Financial Committee, Christchurch City
Council

Subject: Formal review of
Christchurch City Council Insurance

The
Christchurch City Council is undertaking a formal review of
a number of issues relating to the Councils insurance by an
independent barrister QC.

The review follows a decision
ratified by the Council on the 25 July that was publicly
excluded. However, at a subsequent meeting of the Corporate
and Financial Committee, I successfully moved that the
decision regarding this review should be taken out of Public
excluded.

The decision being announced today was delayed
until matters concerning the CEO future were
resolved.

Background

For some time I
have been one of five Councillors (Cr’s Tim Carter, Glenn
Livingstone, Yani Johanson and Jimmy Chen) concerned about a
number of issues with respect to the Council’s insurance.

Regrettably, a number of our colleagues had previously
believed that there was no basis for these concerns, which
delayed advancing this review. However, as more information
became available it was clear that they better understood
why a review was required.

In announcing this review, I
would also like to acknowledge the concerns previously
expressed (June 2012) by Canterbury Employers' Chamber of
Commerce chief executive Peter Townsend, about the low
insurance valuations of some quake-hit council facilities. I
note that at that time, Mr Townsend said the council needed
to investigate these issues further.

I also believe that
when considering why this review is important, one must also
consider the report following the: “Inquiry (19 April
2012) into how Christchurch City Council managed conflicts
of interest when it made decisions about insurance cover.”
http://www.oag.govt.nz/2012/christchurch-city-council-inquiry

Focus
of insurance review

There are three areas of
concern;

1. The appropriateness of the placement of
the Council’s insurance with Civic in 2009 and the
consequent placement with LAPP in 2010.

*The Council moved
in 2009 from NZI to Civic at the firm direction of
“executive management”

o It has been public
record that the movement from Civic to Lapp 2010 was outside
delegated authority. The GM Finance signed off on this
transfer alone, when the delegated authority is for the GM
Finance and the CEO. [ The CEO could not do this as he was
on Civic}- However in this situation the signoff should
have come to Council.

o Civic is largely dependent
on reinsurance monies.

2. A detailed assessment of
the strength of Council’s contractual position with Civic.

3. A review of the two contracts referred to by
Judge McKenzie in his judgement in the Civic versus R and V
Versicherung of 9 April.

There are two contracts- the
original dated June 2010 and a replacement policy dated 20
September 2012. To quote directly from Justice
McKenzie:

“The replacement policy asserts
there were errors in the original contract. There must be a
proper and full enquiry into whether that is so. The
reinsurer’s liability depends on the interpretation of the
original contract not the replacement contract.”

The Judge also refers to complexity
with respects to the relationship between Civic and Lapp and
contractual issues raised from this.

Why
is this review important?

The role of this review
is to ensure that we understand:

1. where and why
mistakes were made;

2. what are the implications to
the council and its ratepayers; and

3. what changes
need to be made to ensure that we don’t make the same
mistakes again?

Normally insurance contracts with
reinsurer’s mirror the contract between the contract
between insurer and entity {CCC} .We need to establish if
this was the case In Christchurch’s contract.

The
Corporate and Financial Services Committee will receive an
initial report by the end of the month. At that time, the
committee will need to determine if the scope needs to be
widened and whether central government needs to be involved.

In announcing this review, I will be writing to the
Minister of Local Government and the Minister of Earth Quake
Recovery to brief them on this
matter.

Prime Minister John Key says Paid Parental Leave, the parental tax credit, the minimum wage and Superannuation will increase, while average ACC levies will fall, and more people will be helped in to home ownership...

“The National-led Government has focused on ensuring gains from our growing economy flow through to families and these measures demonstrate that.” More>>

The National Party Government has today revealed that the national environmental report topics for this year will, incredibly, exclude New Zealand’s greenhouse gas emissions, the Green Party said today. More>>

ALSO:

Reports that German privacy laws may have contributed to the Germanwings air crash have prompted New Zealand’s Privacy Commissioner to reassure the public that the Privacy Act is no impediment to medical practitioners notifying appropriate authorities to a pilot’s health concerns. More>>

The settlement includes a $13.5 million payment the government made in June 2013, as well as land in the Taranaki region. The settlement also includes four culturally significant sites, the Waipakari Reserve, Te Kohinga Reserve, Te Ngutu o te Manu and Te Poho o Taranaki. More>>

Supposedly, New Zealand’s destiny lies in Asia, and that was one of Foreign Minister Murray McCully’s rationales for his bungled reforms at MFAT. OK. So, if that’s the case why didn’t Prime Minister John Key attend the state funeral on Sunday of Singapore’s founding leader Lee Kuan Yew? More>>

The panel choosing the flag options has no visual artists at all. Now, I’ve kerned the odd ligature in my time and I know my recto from my French curve so I thought I’d offer a few suggestions before they get past their depth. More>>

ALSO:

In releasing two reports today, the Independent Police Conduct Authority has highlighted a number of significant problems with the way in which Police deal with people who are detained in Police cells. More>>

The complaints follow recent public allegations about GCSB activities. The complaints, and these public allegations, raise wider questions regarding the collection, retention and sharing of communications data. More>>

ALSO:

Professor Jane Kelsey: ‘As anticipated, the deal gives foreign investors from the TPPA countries special rights, and the power to sue the government in private offshore tribunals for massive damages if new laws, or even court decisions, significantly affected their bottom line’. More>>

Gordon Campbell: The myth of competence that’s been woven around Steven Joyce – the Key government’s “Minister of Everything” and “Mr Fixit” – has been disseminated from high-rises to hamlets, across the country... More>>